Darling Ingredients ((DAR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Darling Ingredients’ recent earnings call painted a picture of both achievements and challenges. The company celebrated record-breaking performance in some segments, progress in reducing debt, and the launch of new products. However, it also faced difficulties with decreased net income and sales, as well as the impact of lower fat prices. Despite these hurdles, Darling Ingredients remains optimistic about its growth prospects in 2025.
Strongest Quarter and Year in History
Darling Ingredients marked a significant milestone by delivering its strongest quarter of the year in 2024, which contributed to one of the best years in the company’s 142-year history. This success was attributed to effective margin management and disciplined capital expenditure (CapEx) stewardship.
Significant Debt Reduction
The company made considerable strides in reducing its debt, paying down $353 million and lowering its financial leverage ratio to 3.68 times. This move reflects Darling Ingredients’ commitment to strengthening its financial position.
Increased Dividends from Diamond Green Diesel
Darling Ingredients received substantial dividends amounting to $179.8 million for the fiscal year, with an additional $86.4 million in January 2025. These dividends underscore the robust performance of Diamond Green Diesel.
Gross Margin Improvement
The company reported an improvement in gross margins during the fourth quarter of 2024 compared to the third quarter, with the food segment margins increasing from 23.9% to 25.7%.
Launch of New Product Line
The introduction of Nextiva, a natural glucose moderation collagen peptide, marked a significant development for the company. The initial sales have been promising, and demand for the product is accelerating.
Strong Cash Flow and Deleveraging
Darling Ingredients showcased strong cash flow, enabling further debt reduction. The company paid down $162.9 million of debt in Q4 and $353.4 million over the fiscal year, reducing total debt to $4 billion.
Positive Outlook for 2025
The company is optimistic about 2025, anticipating stronger performance driven by regulatory clarity on US biofuel policies and a strong start to the year.
Decreased Net Income and Sales Year-over-Year
Despite the successes, the company’s fiscal year 2024 net income of $278.9 million represented a decline from $647.7 million in the previous year. Similarly, net sales decreased to $5.7 billion from $6.8 billion in 2023.
Decreased Operating Income
Operating income fell by $181.5 million, totaling $468.2 million for fiscal year 2024 compared to 2023.
Impact of Lower Fat Prices
A key challenge was the lower gross margin attributed to significantly reduced fat prices, which was partially offset by lower SG&A and other factors.
Foreign Currency Losses
While total other expenses saw a slight decrease, these gains were negated by foreign currency losses, affecting the overall financial outcome.
Guidance for 2025
Darling Ingredients is projecting a promising year ahead, with guidance set for a combined adjusted EBITDA between $1.25 billion and $1.3 billion in 2025. This forecast is driven by strong raw material volumes, regulatory clarity, and benefits from the 45Z clean fuel production tax credit.
In conclusion, Darling Ingredients’ earnings call highlighted a blend of achievements and challenges. The company is making substantial progress in debt reduction and product innovation, despite facing declines in net income and sales. Looking forward, Darling Ingredients remains optimistic about 2025, with expectations for improved performance anchored by regulatory developments and strategic initiatives.
